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EBay Inc. said Wednesday that net income fell more than 30% during the fourth quarter as sales came under pressure from the slowing economy and increased competition. For the period ended Dec. 31, the online auction giant reported earnings of $367 million, or 29 cents a share, compared with earnings of $531 million, or 39 cents a share, for the same period last year.
Excluding charges related to stock options, the company said it would have earned $524 million, or 41 cents a share, for the recent period.
Revenue fell more than 6% to $2.04 billion.
Apart from that, their business model is stagnant.
It's not just stagnant, they have been doing things to rid themselves of some of the small individual sellers in favor of larger organizations.
And I don't know how this is related, but I've been reading they are beginning to enhance the p#rn section, formerly known as the "Mature Audience" category and now the "Adults Only" category. My understanding is, among other things, they are reversing a prior policy and allowing PayPal to be used to purchase p#rn products sold on eBay.
Like Walmart and McDonalds, eBay SHOULD be booming during a bad economy as people look for bargains and get motivated to sell out of desperation.
Their 10-20% fee structure (on top of Paypal fees, etc) have caused more of this than anything. They simply made if unprofitable for many people to continue to use eBay.
This doesn't even take into account a new 'feedback' system which rewards criminals and punishes honest sellers because the crooks know they can use 'feedback hostage' tactics to get their way.
..and no, I don't sell on eBay - but the grumblings and dissatisfaction have been going on for the last year in online forums, etc.
Ebay need to act to weed out the junk and retain quality.
What about a failing affiliate program? eBay can only blame themselves IMHO; they still don't have their post-CJ act together.
I completely disagree. It might still be a bit rough around the edges but and they certainly did have some tracking problems, it has come a long way and is without a doubt one of the best affiliate programs in the US at the moment IMHO.
Their account managers are experienced and know their stuff.
EBay then raised its fees. While it was still a good money maker the thing that killed the deal for me was the change in the feedback policy. Suddenly I had many people making demands that unless I gave in - they would leave negative feedback.
I was just one of many businesses that simply closed rather than fight the system.
Sold two very expensive high-end widgets (good condition, three and two years old, new list price $6,000 and $3,500) last September. I was quite pleased to find buyers for $3,000 and $2,500 respectively.
Thank goodness the Nigerian market is still strong. :)
Our experience with eBay over the years has been terrible. We haven't even been able to get wholesale cost out of a few very good, but overstocked, items we've tested there. And those were brand new.
As a buyer, inconsistency is a problem. I ordered some holiday type led lights on ebay. Found a seller one state over from me and thought I'd probably get them faster than a "real company" across the country. Wrong. This powerseller was so busy that he took three weeks to ship. I wound up ordering from a real company, got a delivery date, etc. A week after the supposed delivery date, I'm told they are back-ordered. I got everything a few days before Christmas. Little late to decorate.
If Amazon sells it, I always get it within two days.
The other problem with ebay is all the non-item crap. You look for an exact item and half of the results are tips, coupons and ebooks for .99 or such. Hard to find the real item.
Fees are too high, the feedback system has been bastarized (sellers can't leave negs for buyers) and just today they launced their new "my Ebay" which everyone hates.
Donahoe will go down in history as one of the worst CEOs ever to set foot in an executive suite. He's got all these metrics and neat-sounding ideas, but absolutely no common sense. He's made it nearly impossible to attract new sellers and has alienated most of the good ones from the past 10 years.
It will be interesting to see how the company decides to break up because they have a very profitable PayPal, a large user base in Skype and a screaming horde in eBay.
The company is in deep trouble, all created by the CEO. Sound familiar (hint: banks)? They all went to the same business schools, I think, ones that put more emphasis on rewarding executives than planning and executing a strategy that rewards CUSTOMERS and shareholders.
Ebay will not last through 2009 in its current structure.
Most power sellers started their own websites and advertised via Google adwords and saved a bunch of money on fee's!
I used to buy stuff all the time on Ebay and sometimes I still do. Was looking at one listing yesterday where the merchant was practically begging any buyers not to give them negative feedback, offering to do virtually ANYTHING to satisfy the buyer & quoting the bible and everything else because of the ramifications of any bad feedback.
Ebay was probably my favorite site back in the day. Still use it but it is going downhill.
We were power sellers doing about $10k a month on eBay. We had a $28 chargeback for one item (The only chargeback we ever had, Someone hacked a pay pal account) and pay pal froze our account for 3 weeks which by the way had over $15,000 in it. After numerous calls to their customer service (Attempting to unfreeze our account) and getting the run around (They claimed they had to do an investigation) we made the decision to stop all together. Pay Pal finally unfroze our account after our attorney contacted them. Needless to say over three years we paid eBay/PayPal well over $30,000 in fee's they lost us over a $28 chargeback because their own PayPal system was not secure. The Pay Pal seller service really was not there. After all, they had $15,000 or our companies money and they froze an account over $28 for 3 weeks. That burned the trust factor we had in that company. Ironic thing is they call us once or twice a month trying to get our business back.
I am glad we did get out, because now they are known not as eBay, but as feEbay.
So perhaps it is not the fault of eBay but of certain users?
As for whines about affiliate commissions. So many affiliates, so much Hormel; oh dear.
I would love an auction site for the EU using the free / very low cost (unless you bank with someone very greedy) IBAN payment system (e.g. payment made to auction house, auction house pays seller once buyer confirms receipt), but it is too much for me to do (problem being the interface with a banking merchant account and the liability thereof). But there it is for someone to become a billionaire.............
In a way, they've dug their own graves. Their brands wreak corporate but people are stepping away from corporate because of customer service issues and the generality of the companies.
I think Amazon & eBay will no longer be viewed as the place to pick up a quality product at a reduced rate because the manufacturer of the quality product will have several niche sites to sell on which will offer her/him a better return for the sale and generate more sales than Amazon. I think Amazon will become the dime store of the Internet and sell products for new manufacturers and cheap imports.
Buyers want personal service and niche marketers are slowly winning them away from the gorillas. We may not be able to compete head to head with Amazon or eBay if we position ourselves as General Stores of the INet but we can compete with them and beat them handily in niche markets.
Cant do that with Amazon, sure the others are more costly but by a few pounds.
Oh and they dont spam me every other minute of the day.
Richard Garriott created the massively popular online game Ultima Online way back in 1997. Does the year sound familiar? Yes, his online virtual game embraced the players desire to run mini-businesses from within the game. Game items for money.
eBay got in on that early action and embraced Ultima Online auctions - low and behold they made up a significant part of ebay revenue in those critical years. Over the next few years the MMORPG market exploded, many of those games had auctions on ebay too.
Fast forward to recent times, eBay rids themselves of any game related auctions and bans any "non-tangible" items thus driving off all virtual item sellers. It seemed they were no longer good enough to partake of eBay. eBay blamed fraud however the solution is never to cut off important revenue streams with an all inclusive banning, they did.
Next they create their own in-house affiliate program and promptly chase off a large number of affiliates. They tinker with new systems of paying affiliates and alienate them further. They change the rates of payouts and have some auction types pay a flat fee if an item sells.
More tinkering. More "new" ideas changing how things are run. More spreading into other businesses like apparently pr@n and becoming vehicle shipping brokers instead of becoming actual carriers. More... but less.
BOTTOM LINE, and read this carefully eBay employees...
When a company decides it can implement it's will and make changes at will that the users don't really want, the system fails. ALL systems fail in this scenario, some linger on painfully first.
SUCCESS - look at myspace and youtube as examples, companies who did NOT define what their service was beyond setting up the platform for members to use. In the case of myspace hacking the site ran rampant to change layout appearance BUT did myspace stop members from doing that? No, they embraced it, THAT was what the myspace members wanted and myspace understood that giving it to them was important.
eBay has come full circle now. A company who embraced what it's members wanted has become one that is heavy handed in every aspect. An ever growing number of disgruntled sellers, affiliates and users will attest to that.
enter craigslist. By far not as attractive, fewer features even, but in the end the members define the service and so it flourishes. eBays reaction is to tighten down on members further and further thus hastening the end.
eBay is no longer a booming growth story nor does it look like it will ever return to the glory days unless someone releases the leash a little bit and they cut the fat at the top. A company doesn't need so many high paid execs, advisers, managers etc...etc. A handful of web designers with open ears would serve MUCH better.
Will ebay wake up and stop trying to tell their members what the site is all about instead of allowing the members to define eBay? It doesn't seem likely.
edit: Julian Dibble wrote an excellent book called playmoney on the Ultima marketplace years ago when eBay was flourishing, an excellent eye opening read if eBay interests you. The mistakes eBay is now making become glaring if you follow some stories of that early excitement.
[edited by: JS_Harris at 9:13 am (utc) on Jan. 25, 2009]
As a buyer, I do not feel safe from bad sellers (despite all the stupid tricks they've used to upset good sellers).
As a seller, I do not feel safe from bad buyers (despite all the stupid tricks they've used to upset good buyers).
I used to buy and sell a lot; now they are a place of last resort - I didn't even browse for unwanted Christmas presents, historically the best time for a serious bargain.
And the site is so clunky ...